Sponsor terrorism. We also have sanctions against countries that are violating our International Norms on democratic principles. Russia is top on that list. Im going to ask you questions for the record as to your views on the current sanctions and strengthening sanctions. We have Bipartisan Legislation to strengthen the sanctions, particularly with russias attack against americas democratic election institutions. But i want to make sure i understand. You are committed to enforcing the sanctions against russia . 100 so. And i think the president elect has made it very clear that he would only change those sanctions if he got, quote, a better deal than we got something in return, whether it was on nuclear arms or other areas. But, yes, senator, ive talked to you about this. In response to the questions asked about using the irs, make sure its not used for partisan reasons, you will enforce these sanctions without regard to a persons party, affiliation or office . Of course. I think terrorism is the trump and supporting terrorism and supporting illegal activities is the most important issue, and i hope thats not a bipartisan i hope that is a bipartisan issue and where there are sanctions, i assure you, i will use them to the maximum amount allowable by law. And i appreciate that answer. Senator warren and i are going to be sending you a letter. If you are confirmed, to investigate the allegations that mr. Scaramucci, who was recently naumd as the white house director of engagement in Intergovernmental Affairs and Senior Adviser to the president , may very well have violated the sanctions against russia in his dealings. And i accept that you would investigate this issue to see whether there was a violation of the sanction law. Of course. Anything that you send to me, i will either myself or make sure that my staff properly investigates. And have your respect that i would do that 100 . I thank you for that. I want to follow up on the second point of senator wyden which really has me concerned, and that is that you pointed out that you would treat in your International Roles an American Company thats deal with foreign markets equally, even if its a trump enterprise entity. You are taking an oath to defend the constitution of the United States, and the constitution of the United States, theres the clause and you have to make sure that if you are deal with a trump entity that its not getting a favor in exchange for trying to influence the president of the United States and the Trump Administration. So how do you go about knowing that theres no special breaks being given to a trump enterprise if you dont have full access to that type of information . Well, senator, let me first say, and i think we all acknowledge this, whichever side were on, that we are in a unique situation that we have a president who has the vast amount of money that we know that. Of course, but hes not doing what every other president every other president has done. Every other president set up a blind trust or divest. What you are dooring, divesting. Hes not doing that. So my question to you, how do you if confirmed, deal with compliance to the constitution, to make sure that a trump enterprise is not getting special treatment which would violate our constitution . Well, senator, let me first say, and i think this is a very important issue for the American Public so i can understand why youre asking it. But let me first say, i know that the president elect is absolutely following the law and is committed to following the law and has set out a series of although its not a blind trust, he has removed himself from his business. He has put his sons in charge of his business. Hes committed that but as i understand excuse me one second. Hes going to hire an ethics officer, and i can assure you that in my job of treasury secretary, whatever responsibilities i have to monitor these issues, which are very important, i can assure you that i will do. What you didnt answer and well follow up with some questions, how do you determine, make sure there isnt a break given to a trump enterprise, which would violate our constitution . I understand its complying with the law but the constitution is the supreme law of the land. Well, as you know, ive employed lots of lawyers, but im not a lawyer. But the good news is, we have a big group of lawyers in the Treasury Department and in a big ethics group and i can assure you that well make sure that we absolutely follow the law and the constitution and i have every reason to believe that the president elect absolutely wants to adhere to it and will do so. Senator brown . Thank you, mr. Chairman. And mr. Mnuchin, thank you for the conversation. And my office about thank you for meet with me. Taxes and china and banking issues. Lets clear up one thing. Banks are not, in your words, highly innocented to do modifications for their borrowers. Thats why we had a systemic breakdown and so many families lost their homes and banks were forced to pay billions of dollars in fines and remediation. I want to talk about your situation. I understand your defensiveness both in individual meetings, mine and others, and in this committee about what happened at one west but let me lay this out. In 2006, Businessman Donald Trump responded to a question about the possibility of a real estate crash by saying, quote, i hope i sort of hope that happens because then people like me would go in and buy, unquote. You didnt just buy properties. You bought the baunk, the abiliy to help families stay in their homes. Thats not what you did. So my questions are these. Youve been saying lets look at the record. I really want yes or no answers because i have a lot of questions and what i will say is factual in my view. Id like you to confirm with yes or no. Is it true that Community Groups say that one west specifically the california the california reinvestment coalition, is it true the Community Groups say that one west foreclosed on 60,000 families nationwide and denied threefourths of mortgage modification applications . I am not aware of that. I know theyve well, they did. If you know they did, then why because i want to hear it from you. If you i dont have it from me. Im going to keep interrupting. I apologize if you see that as rude. I dont see that as rude. Is it true one west regulatorsed is you have deficient mortgage practices foreclosed on 10,000plus borrowers without proper procedure in at least 23 who were current on their mortgages . So what i would say is we followed the same procedure yes or no. Did the occ say that . The fdic followed. We inherited the fdic the occ is separate. Let hum answer the question. Is it true that one west independent audit firm said it violated the Service Members civil relief act by initiating foreclosures on 54 active duty military families . Thats what the independent audit firm said. You have the document in front of you, i dont. Well, they do. Let me just say im pretty surprised you dont know these things because youve been rather defensive for probably good reason about what happened at one west. I is it true the California Attorney germ i want to comment for the record. We did foreclose on certain people in the military. It was quite unfortunate it was inappropriate. We responded to those people and made them whole. As i said, every Single Person had the opportunity to have their mortgage reviewed and we corrected any errors. Our errors were less than anybody else. Okay, im going to cut you off. Its not that im being defensive. Im proud of our i wouldnt be proud of all these findings. Is it true the California AttorneyGenerals Office said one west back dated 96 of the documents they examined and the their investigation. Did they say that . First, let me comment that i sought the leaked memo as you did. I think its highly inappropriate that somebody at the Attorney Generals Office was so is there no truth in that about back dating 26 what i would say is the primary regulator was the occ. They were the ones who had the obligation to occ said the they said you had these deficient mortgage practices which you couldnt remember when i asked you about occ. Now youre saying occ in response to California Attorney general. Is it true that one of the employees who was in charge of the modification, one of one west employees is accused one west of not having any process in place to help its 3,000 fha and va mortgage borrowers avoid foreclosure . And that this same employee, who was in charge of modifications, has accused one west of not having a process in place to help those va mortgage borrowers avoid foreclosures and submitting false claims . It seems to me, in all due respect, you want to shoot questions at me and not let me explain e ill let you explain after ill let you explain when im done. Well, then at least understand, these are complicated questions. They are complicated. Let me at least explain them otherwise theres no point in shooting them all at me and i dont have the ability to respond. You dont but all of these are factual things. If you want to follow up with a response later in more detail. One example of and you can answer this and take as long as you need. One example of an insider loan was the media deal. The fbi denied a foia request. Have you been questioned by Law Enforcement on this . Yes or no. I have not. And i saw that you wrote that letter yesterday. I assume that the fbi did a thorough review of my background report. I have no idea why they didnt prove the foia issue. Ive been told we have no reason to believe its any issue associated with me. Fair enough. I am glad you should direct that to the fbi. Okay, and i will. I accept your answer. I accept your answer. Youre not being investigated but i find it interesting that you know about the letter i sent yesterday. The letter i sent with all those questions detailing all of the issues i just asked about with bank west, west bank one west. One west, i apologize. Thats right. My father forgot the name sometimes as well. The letter i support you back in early, middecember about this youve not even taken the time to answer and it really laid out all of this. The one west purchase went well for the treasury secretary desing ide designee but it was bad for investors and taxpayers. We can talk more about taxpayer cost on this whole process and the amount of money that he bought it for, sold it for but mostly subsidized by taxpayers. Senator, your time is up. You take as much time as you want to answer. First of all, senator, i did enjoy meeting you. I dont believe we had the opportunity to meet before that time. And if im confirmed, i look forward to spending more time with you. Thank you for saying that. I know that you have some, although we may not agree on everything, there were certain things we did agree on when we met. And i have a lot of respect as you as a senator to hear your issues. Now i did tell you, i did acknowledge that you sent me the letter. I was advised by the staff that the appropriate thing was for me to come here and answer questions or meet with all of you independently and answer questions that you have. And if i dont satisfy that, you have the ability to submit questions afterwards, which ill respond to. When i came to your office, i told you that, and i said i would spend as much time with you as you wanted answering those questions that they were quite significant. And, you know, because i knew they were complicated. So i did tell you, although i wouldnt respond to them in writing at that point, that i did understand your questions and i wanted to address them. Senator thune. Thank you, mr. Chairman. Mr. Mnuchin, welcome. We havent had a single year where the growth rate has exceeded 3 . A lot of the Current Administration describes that as the new normal. Thats a reasonable expectation in terms of the growth rate in our economy . Historically if you go back to world war ii, what is a reasonable growth rate . Hang on. Im just looking at some of my notes. The short answer is ive said publicly and i believe that we should be able to get to 3 to 4 sustained gdp. I think that thats absolutely important. I think that as a country, the most important issue we have is Economic Growth. That whatever issues we have, as republicans or democrats, i think we can agree that with more growth, its a lot easier to solve these issues and we should all be focused on things that help grow the economy. In 1984, we had 7 . In 1998, we had 5 . In 2005 we had 3 . That was the last time we had appropriate growth rates. So i share the president elects concern of low growth. Our number one priority from my standpoint is Economic Growth, and i can assure you, i will work tirelessly, if i am confirmed, to create growth in the economy and create probroeth programs. And i commit to work with all of you on that. Were going to break away from the hearing right now. We see the family getting off this u. S. Air force jet thats just landed outside of washington, d. C. Joint base andrews. You see some of the trump family members, the kids, grandkids, others walking down. Theyre going to be heading over to a series of events here, jake, in washington. A series of events that will underscore the, i guess, what we can say the majesty of what is about to happen. The transfer of power to a new president. We see don jr. , his family, eric trump, his family. Theres tiffany trump, other members of the president ial transition team. We expect president elect trump and Vice President elect pence at about 2 45 this afternoon east coast time to lay wreaths in a ceremony at Arlington National cemetery. And then this evening, there will be whats called the make America Great again welcome celebration at the lincoln memorial. A number of performers out on the mall for the crowd. We expect president elect trump will speak at that perhaps as well. This is truly the beginning, as of right now, youre witnessing it right now, the beginning of president elect trumps time in washington, d. C. Officially beginning right now as he touches base on that airplane at joint base andrews right outside washington, d. C. He will be here for the duration. Hell be walking out of this plane shortly. Gloria, the president elect and his family will be staying at blair house tonight, the official residence for visitors for guests from the white house. There he comes. You see the president elect of the United States walking down. Theyre going to hold on to the sides. The future first lady Melania Trump. They are walking down, holding the sides as i hoped they would. This is a moment that im sure for the trumps themselves, its hard to believe its all falling into place right now. First of all, they arent on their usual airplane, wolf. And they are at joint base andrews. And Melania Trump, who has not spent a lot of time in washington, it must all be becoming very real for her at this moment. And so i think its a different feeling for them as they leave trump air back in new york city. We also we dont know, by the way, Melania Trump is going to stay up in new york, at least for the end of the school year. They have a 10yearold son barron. Shes going to stay in new york through may or june. We dont know what happens after that if she and barron plan on spending most of their time in new york with the president elect going up on weekends or whether she will come down and move into the peoples house, the white house, dana bash. Absolutely. And just i think to look at this scene, i dont care who you are. If you are used to flying on trump air with gold plated everything, to play in to joint base andrews on that plane and get out with that carpet and to get into that car knowing where youre going, i mean, its pretty remarkable. And even if you are donald trump, youve got to be taking it in and saying, wow. This is happening. I am now here on the ground headed to be the 45th president of the United States. And the fact that he got to this moment is just amazing. John king, tomorrow morning, there will be the official transfer before the swearing in ceremony up on capitol hill. The president elect will sit down with the president of the United States and theyll have an opportunity to talk. And partisans will view this through their prism. Democrats are still having sore feelings. I hope everybody takes a moment to look at the majesty of it. The president elect, who will be president this time tomorrow, saluting as he comes down those steps. Its a signature moment. The president getting on marine one, off marine one, on or off. He salutes or waves. It will be donald trump for the next four years. Eight years of barack obama. Three successive twoterm president s. Well stay in blair house tonight across the street from the white house. The official guest residence. Coffee with the obamas and then ride up to the capitol. Were focussing on the feisty confirmation hearings. The fight over the trump team. A lot of issues to be debated and questions about the agend athe priorities and speed and what will come first, the sequencing of the new administration. I hope everybody just takes a few minutes to just say, this is something to celebrate whether you are happy or mad at the results, this is a great country. Coming into work today, they have the security barriers up everywhere. You can still get your coffee and go about your business. And this part should be celebrated by everybody. 228 years of the peaceful transfer of power. Fight the next day. This part, i hope everybody would just respect the process and the majesty and lets see how trump grows into this. Hes never been a politician or in Elective Office. Were about to learn a lot about this man. He should also have the opportunity given what hes done, which is remarkable, taking offer the republican party, winning the presidency. Its been a contentious transition and president elect trump begins with popularity ratings not where hed want them to be compared to where president obama, president george w. Bush and others have been. But senator Rick Santorum, let me bring you in here. This has to be, even though we know he is a man who is not of inconsiderable selfregard, it has to be somewhat humbling for him. I cant imagine. Just look at the way he walked down the steps. Its a heavy moment. Its just a heavy moment. And having been up on that platform for a couple of inaugurals and watching the, you know, up close the interplay between the incoming and outgoing, its it does sober you. And a lot of people say, well, donald trump has to do this. I think donald trump will in his first few days, i think we have i have hope that hes going to begin to sort of feel the weight even more than he has. Its not been a traditional transition. Now that hes here, now that hes got all of the trappings of the presidency around them, it does change you. Ive talked to a lot of folks about it. It does change you. Well wait and see. Im optimistic. I really am optimistic. Normally once he becomes president he wouldnt have a motorcade unless the weather was bad to go from joint base andrews in maryland outside. They would take marine one and land on the south lawn of the white house. Hes not yet president of the United States. This is probably going to be about a 20minute ride. The Police Escorted motorcade into washington, d. C. , and, of course, heading over eventually to blair house where hes going to be staying. Angela rye, your thoughts as we watch history unfold. Definitely an historic moment. I think that its been a very interesting campaign. It was run very much like a reality show, and i think it was unconventional. This populist type president that appealed to aunger, that appealed to trusteration in this country, and i think capitalized on it in a lot of ways. Its also interesting to see this happening while the hearings are happening on the hill as contentious as they are. But he has nominated some folks able to withstand that pressure and that pressure will not let up in the coming days. There are a lot of mixed emotions around this inauguration. Folks who are really, really excited and happening about whats to come and folks who are lamenting the passage of time thats really gone by with the first black president serving two terms. So interesting to see and ill be watching. Gloria, theyve said really nice things about each other. The outgoing president and the incoming president. Even yesterday, they were talking about how gracious this process has been at their level. Well, as it should be, wolf. And talk about this being a moment. Im sure it was as Rick Santorum said a moment for donald trump walking down those steps. Not only is he going to have coffee with the outgoing president and his wife, but inside his desk will be a note that will be written by the current president of the United States, a personal handwritten note to the incoming president with some advice for him about what he is about to undertake. He will also be handed the nuclear codes. And everything i have been told about that from people who have worked for president s in the past is that that is such a sobering moment for anyone to know that those are within your reach. And i think that all of us can be in awe of the process that we are watching, which is this peaceful transfer of power that we do so well in this country, no matter how divisive the election was. We have to take a look at it and say this is important. The motorcade, the president elects motorcade leaving joint base andrews. Were going to continue to monitor that. But i want to go back to the Senate Finance committee hearing. Steve mnuchin, the treasury secretary nominee is in the hot seat once again. Complex securities, so i dont necessarily i think if we have proper regulation, a lot of the need for title 2 also goes away. Ive run out of time. Thank you, mr. Chairman. Senator bennet. Thank you, mr. Chairman and mr. Mnuchin for your willingness to serve and for your meeting yesterday for clarity. So the wall street journal yesterday, dollar sinks as trump talks it down. Do you believe the dollar is too strong . Again, i believe in the short term as treasury secretary, are we ever going to hear you say that the dollar is too strong . As treasury secretary, i dont see it as my role, okay, commenting on the dollar on shortterm movements. I have commented on what i believe are the long term. Let me ask you a different question. In 2011, due to the dysfunction in congress, we almost failed to raise the debt ceiling here. And as a result, Rating Agency downgraded our nations debt for the first time in history. The stock market lost 17 of its value and didnt recover for almost a year and Consumer Confidence fell 22 in just a few months. A completely selfinflicted wound on the american economy. This unforced error hurt americans Retirement Savings and dealt a blow to growth and job creation. During the campaign, mr. Trump suggested he could somehow refinance or renegotiate our existing debt while he walked away from the idea initially later in the campaign, he again suggested he could pay our creditors less than what they are due. You go back and say, hey, guess what . The economy just crashed. Im going to give you back half. You also suggested the United States never has to default, quote, because you print the money. Do you agree with these statements . Senator, first of all, thank you for asking the question about the debt ceiling which i want to comment on. Good, because i have another question. Its a very important issue for all of us. If im lucky enough to be confirmed will be something please dont filibuster. I appreciate that. On the president has made it clear and i think its perfectly clear that honoring the u. S. Debt is the most important thing. Okay so, then i hope that when we get to the point, if im confirmed that we have to have the debt ceiling that we wont go through another one of these issues because there certain things that i would have the power to postpone this. But i firmly believe the u. S. Has the obligation to honor its debt. Can you commit to working with the congress to pass a clean debt ceiling . I will commit to absolutely work with the congress, the house and the senate so we dont get to the last minute and run out of money. Is that a yes, youll be passing a clean debt ceiling . I dont know your technical definition of a clean debt ceiling . I would like to raise the debt ceiling sooner, rather than later so we dont have a risk of defaulting im grateful for that answer. Thank you. The Nonpartisan Tax Policy Center found the president elect trumps tax plan would increase the debt by 7. 2 trillion over ten years. The president elect has proposed increasing defense spending anded and ed said he will not touch entitlements like medicare or Social Security. Hes own suggested reducing spending on nondefense Discretionary Spending. In 2015, nondefense Discretionary Spending comprised about 17 of the budget, 583 billion. This includes funding for veterans benefits, transportation, National Parks and investments in research. Even if we didnt spend a single penny on any of these priorities for an entire year, which i would not suggest, but even if we didnt, that would only pay for about 8 of mr. Trumps tax plan. Is the tax plan that increases the debt by 7. 2 trillion an acceptable outcome to you . I believe the 7. 2 trillion number was the first tax plan and not the second tax plan. I believe it scored dynamic closer to the first tax plan was 11 trillion. The second, i think is you must be referring to static and not dynamic. The dynamic number was closer to 2 trillion. But the dynamic is 3. 6 trillion. So in any case, what were doing is adding mountains of debt. Let me just comment that i have discussed the debt with president elect. We are both concerned that weve gone from 10 trillion to 20 trillion of debt. We think that the way to reduce the debt is by Economic Growth and that will create the opportunity for us to pay down the debt. Let me make a comment on the senator thune said well that our history in our history, the average growth rate weve seen is about 3. 2 . It would be great to get to 4 . You said between 3 and 4 . But theres no way thats going to fill the gap that is projected in these tax plans. And i can accept the fact that the president elect may have changed his mind or you differ with him. Im just trying to understand whether you would find it acceptable to bury the American People under this kind of proposed debt. Again, i think as you know, we had a rather modest Campaign Staff relative to the other people out there, okay . So one of the things i look forward to, if im confirmed is having access to all the people at treasury able to model these things. We were forced we had some internal models but were forced to rely upon external models. Certain assumptions we agreed with. Some we didnt. Whats important is that President Trump has a pro growth economic tax plan. And we are sensitive to the costs of that plan. Yesterday i did have the opportunity to meet with senator wyden. We talked about the process for tax reform. I will be the person from the administration taking the lead on that. And i would look forward to working with the house and the senate. Both republicans and democrats to move forward on tax legislation. Im out of time, mr. Chairman. I realize that. I want to make one observation which is that mr. Mnuchin, in fairness to him, has twice praised the employees at the Treasury Department today and i just want to say thats a refreshing and Welcome Change from what we have heard up until now in a lot of these hearings. Senator isakson. Thank you, mr. Chairman. Mr. Mnuchin, welcome. Im sorry ive been in and out of the room but ive been listening outside while ive been outside. Thank you. Im pretty much up to date. Im really going to talk about something i had not prepared myself to talk about until i heard some of the other questions and testimony that went on. I want to talk about mortgagebacked securities. Fannie mae and freddie mac in 2008. Your purchase of india mac was in 2008 . December of 2008 we committed to it. Beginning of the crisis was in july of 2008 when Merrill Lynch drove down their portfolio, subprime securities by 71 cents on the dollar. Is that not correct . I think thats correct. Started a domino effect around the world that collapsed the mortgagebacked securities and their values. That is correct. When you purchased indymac it had a number of those loans in its portfolio . It had mortgagebacked securities. Within which were included those loans . Yes, thats correct. Wat wall street did is wall street packaged lons and put them into a security based on high yield. Is that not correct . What happened is they had secure tiesed the loans themselves and they got stuck keeping them. In many cases most of the mortgagebacked securities they didnt buy. Most of them were failed sales. Is it not true that the freddie and fannie guaranteed insured loans pretty much at the direction of the congress of the United States when it came to the Affordable Housing loans . Is it not true that congress directed them to have a larger percentage of Affordable Housing loans in their portfolio . Absolutely. And i believe that, unfortunately what led them to buy a lot of bad loans. What i want everybody to understand when they are talking about these mortgage issues, i was in the real estate business for 31 years. And was in congress at the time this went on. But what happened in a lot of these loans is they were made because the inducement or direction of congress to take more of them. What was called an Affordable Housing loan ended up being a subprime loan, if you will, which ended up being a high risk loan. You had a high Interest Rate on it which was a high coupon was packaged together into securities and sold around the world. Is that not correct . Thats true. They had all different types of acronyms. Load docs, subprime. They just should have been called bad loans. Thats what they were. And your indymac as i remember and i recall tried everything it could to recalibrate those loans, restructure those loans and renegotiate those loans to keep as many as possible from not going into foreclosure. Thats true. Not only for the loans we owned but loans we serviced for fannie mae and freddie mac. Matter of fact, the one person who came to my home and protested at my home it was a fannie mae loan and i wasnt able to do anything about that. Calls to fannie mae that i was able to get a loan modification for that person. But many times people thought we owned the loans, and we did not. They were owned by fannie mae and freddie mac and other security holders. The main point for the sake of this argument and a lot of the questions youll get is a lot of them were originated at the encouragement of the United States government and congress of the United States. Thats what and they were called Affordable Housing loans. A lot of people bought those loans. And they inherited the problem. They didnt originate the problem. Theres a world of difference between originating a loan and buying a loan. Correct. The loans that we originated on the mortgage side Going Forward were good loans and had nothing to do with those terrible legacy loans. So, thank you for pointing that out. Thats the important point. If you originate something, you own it. But if you acquire something thats a bad debt or a bad piece of paper, you are shame on you for buying it but its not your problem for creating it and thats the important thing to know. That is true, senator. Thank you. I say shame on you and not shame on you in that you did something wrong but shame on you that you inherited something bad. Yes, i understood that. One last point. I have been told by my state director of revenue that the irs is not sending out that the federal government is not sending out w2 forms to the state revenue correct. I would hope youd Pay Attention and try to direct them back to doing that because the only way to keep bogus loans and intrusion into our portfolios is for the people to get back their income tied to their Social Security and the federal government to get their report on that at the same time for us to get it. If youd work on seeing to it that those practices are ended somewhere around the country, id appreciate that. Ill be committed to work with you and your staff on that issue. Thank you for your willingness to serve and congratulations on your nomination. Thank you. Thank you, mr. Chairman and mr. Mnuchin to you and your family. Welcome to the hearing today. Since the beginning of the great recession, no state was hit harder than the state of nevada. Youre probably well aware of that. We led the country in bankruptcies, foreclosures and unemployment. So you can imagine that were a little sensitive as to who becomes the next treasury secretary having gn through that over the last eight or nine years. You calm into my office in january on january 4th, and we had a good discussion. I appreciate the visit. I asked you some questions. And id like to ask you the same questions today. Absolutely. The question was, how many nevada homes were in one wests banks portfolio . Unfortunately, and ill go back and request that information from the bank. I no longer have that information, but i will work with the bank to try to get that for you. How many nevadans did one west bank foreclose on while you owned the bank . Again, i have the information thats in public reports, but im absolutely committed to go back and get that information for you from the bank. So i apologize. I dont have that with me today. And i do appreciate how hard your state was hit in the foreclosure crisis. Do you know how many nevadans one west bank provided assistance to through Loan Modifications . Again, ill go back and try to get all that information. Heres the reason i ask you these questions over again. This is the seventh time ive asked. So i asked you when you were in my office and had my staff follow up on it three times by text and twice by phone and we still cant get the answers to these questions. Im not quite sure with two weeks well, your own comments were that you guys had responded to 5,000 pages. 5,000 pages of questions asked. Why were these three questions not asked if you had 5,000 pages of questions that you answered . First of all, let me apologize to you because i do recall you asking them in your office, and theres no excuse they havent been answered. I was not aware that my staff also got those questions. So i apologize to you. And i assure you personally that as soon as i get out of this hearing, i will request that information from the bank. Were responding to a lot of other information so i apologize. This is important to you. And you have my commitment that we will get that. In 2008 when one west purchased indy west can you tell me what motivated that transaction . Was it a way to save the bank . A way to make money or to keep people in their homes or some other reason . I think it was all three of the above. So, you know, we i saw the opportunity that i thought that there was going to be a banking crise, i and i saw the opportunity that we thought we could turn around the Regional Bank and turn it from what was a lousy Mortgage Bank into a Regional Bank. I have to convince my investors theyd make money, but i saw it as also a great goal of building a business. Now i just may comment and, yes, my investors made a lot of money on one west but i just comment of if we had just invested in jpmorgan and bank of america and handful of other stocks we would have made a lot more money. And i wouldnt have to have worked nearly as hard. So a big part of the financial return ultimately was, we invested in the market at a very depressed period of time. Were you motivated or let me ask it this way. Was it an objective of one west bank to foreclose on nevadans in order to receive compensation from the fdic in their shared loss agreement . No, quite the contrary. So again, when we bought indymac from the fdic it was inherent in these agreements. We committed to do Loan Modifications. So when we bought the bank, that was the agreement. As ive said before, we were proud of Loan Modifications started there. And we actually had a bunch of incentives, whether it was other things in the loss share agreement where it was actually much better for us to do Loan Modifications. As ive said before, i can assure you what prevented us from doing more Loan Modifications was another the net present value test or was what was the qualification in so we were required to get updated income and people had to have had to be able to effectively requalify for the loan. So as ive said before, not only from a social basis did i want to keep people in their homes but we were economically motivated to do that. How much did the fdic pay one west for the losses . What do you mean by how much did they pay us for the losses . What was the compensation for the fdic for foreclosing on homes . Share loss agreement. The way the shared loss agreement, and i would comment, i think theres been like 400 shared loss agreements, i think, according to the fdics public data, they believe that they saved 40 billion by using the shared the answer is 1. 2 billion. 1. 2 billion. But thats after we absorbed 2 billion of losses. So youre not saug thats not a motivation to foreclose on a home is 1. 2 billion . No, its not a motivation because there were restructuring fees that were put through when we did Loan Modifications. And we wanted good loans. We were not, again, let me just be clear. We wanted good loans. Having good loans that performed under the lost share agreement was absolutely critical. One more question. Did one west bank specifically target muinority communities in nevada for foreclosures . Absolutely not. Mr. Chairman, my time has run out. Your time is up. Senator casey. Mr. Chairman, thank you. Mr. Mnuchin, appreciate you being here with your family. And i wanted to start with a subject that youve already answered some questions about. The issue of mortgage foreclosures but also modifications. Im holding in my hand, i gerue, a fourpage document entitled, and this is a channel 4 in pittsburgh investigative report Just Announced this week. Trump picked for treasury secretary foreclosed on hundreds of homeowners in western pennsylvania. Its dated january 16th. Mr. Chairman, id ask consent to have those part of the record. Without objection. Let me just read you part of it, mr. Mnuchin, because i know sometimes when these reports refer to individuals, you may know them. You may not. Im not going to ask if you know this person, but heres just a couple of excerpts. According to channel 4 in pittsburgh. Nelly manelik lost her husband to cancer. Lost her son to an overdose and then she lost her home to one west bank. She says, and im quoting from her words here. One thing ill never get over is my sons death. She lives in westmoreland county, east of pittsburgh, in ruffs dale. Heres what nelly hoped would have happened. She said and i quote, they, meaning one west, they should have worked with me to meet a payment that i could make. The report goes on to say, she filed bankruptcy but even then could not save her house. She said it caused her a lot of depression. And then it lists a couple of examples from other communities that were foreclosed on. A house in white oak was foreclosed in 2014. A house in north ver sails in 2013. Penn hills in 2012. A house in pittsburgh in 2011. But again, the headline says hundreds of homeowners in western pennsylvania, depending on where you draw the line. Thats probably ten counties roughly. So one region of a state of 67 counties. One of the reasons i highlight that is to, number one, focus on the impact those foreclosures had on one community and one state but also to ask you some questions so i can make sure the record is clear to the extent we can get to these in this line of questioning about modifications and foreclosures. One of the statements you made in my office when we met and i appreciated the time we had, you said one west, quote, did lots of modifications, unquote. And then on the question of foreclosure itself, you said at the time we only did 30 to 35,000 foreclosures. Is that correct . That was for the period of time that we were talking about 20092010. So thats just 2009 and 10 number . I believe 36 with 2009 and 2010 versus 175,000. The 100,000 Loan Modifications was over a slightly longer period of time. Let me just get this. Over the whole period, that you were the leader of one west, how many foreclosures total nationwide . I dont have that, but i can find the number. Let me just comment since theres a lot of talk about this foreclosure business. 93 of the loans that we serviced, we serviced for third parties. We sold this business. So i never wanted to be in the Mortgage Servicing business. I didnt want to be in the reverse mortgage business. I wanted to build a Regional Bank. So one west is no longer. We sold years ago the servicing business because we didnt want to be in that. We sold that business. Obviously, the loan that youre talking about, i mean, it sounds like an absolutely horrible situation and i simp theympathi that person. I appreciate. Let me get to the second question here on modifications. There seems to be some discrepancy here about in numbers on modifications. You say in the in your testimony today, and im quoting you hear, at the bottom of age 2, ultimately one west extended over 100,000 Loan Modifications to delinquent borrowers. Now extended isnt the same as a modification. Extended means they were put on modifications. Whether thats thats not a completed modification . No, but again, they were offered and they were put on a loan modification. But, in fact, in fact, according to a document that also ill make part of the record, this is a onepage document from hamp, the home affordable modification program, that mr. Chairman, i would ask that it be made part of the record. Making home affordable summer results. Thats the name of the document. In fact, let me just say one more, mr. Chairman, in terms of total modifications, it was really only 22,908 so well put that into the record. More questions later. Without objection. Well now turn to senator cassidy. Mr. Mnuchin, nice to see you. Thank you. As you can tell by where i am, im fairly junior on this panel. I will note youve been somewhat assaulted by innuendo. My sympathies for being assaulted by innuendo. Thank you. As regards Economic Growth, i wrote an editorial with a friend in tthe wall street journal that showed if we had the Economic Growth from 2001 to 2014 as we had from 93 to 2000, in 2014, we would have had a 500 billion surplus despite entitlement spending, despite whatever as opposed to the 500 billion deficit we had. So i appreciate your acknowledgment that progrowth policies cover a multitude of sins. So good for you. Thank you. That said, i represent a lot of rural parishes. And theres two things driving Economic Growth in such parishes. Typically Utility Companies want to sell more and community bachks. And since dodd frank passed, the number of Community Banks has just plummeted. Omg, as my daughter would say. Your thoughts as regards, how do we revive the fortunate Community Banks which in my mind is how do we revive the prospects of Rural America . Well, thank you and first of all, i enjoyed the opportunity to meet with you and talk about a bunch of these issues. And i think as i mentioned before, i am very concerned that we have and continue to be in the business of putting Community Banks and small Regional Banks out of business. That the regulatory cost can i interrupt for a second . Of course. One guy, i dont know what his bank is worth. 80 million. He told me that 64 regulatory visits in a 52week period. The marginal cost for this small bank is like, why am i not selling. Im sorry, continue. That sounds about right from my experience. Thats about the right ratio. So i agree with you completely. As ive said if we want to have Economic Growth, for us to end up with four or five big banks in this country, you know, and deal with the two big to fail and everything else, or the too big to succeesucceed, we need t banks. Regional bau aal banks, communi. Those people understand the people in the community and can make good loans. Also related to that and something you were speaking, i think, with them, that it doesnt seem like we have an absence of capital in our society right now. Weve got a lot of capital. Thats correct. Its just that we cant get capital down to Evangeline Parish and bring prosperity to Evangeline Parish. You dont need to know where Evangeline Parish is. It shows its a smaller parish in terms of population. I presume you agree with that. I do, completely. Now related to that and again, this is something for my edification. But it strikes me that theres two possible goals of tax reform. One is to create more capital. I think under the reagan tax cuts is high marginal rates deprived capital to those who need it but it seems as if we have enough capital floating around, although chokeholded at certain points. And the other point of tax reform would to be align and sentence. You spoke early are with thune that you want to incent folks to keep the money within the business. Create jobs. Would you agree with what im saying . You are the economist. Of the two is there a third reason to do tax reform, against fairness, so if you throw those all in, it seems as if capital, though, creation of capital is the one which isnt the priority so much as to align and sentence, perhaps create certainty. Continue. You go. I agree with you. The only other thing i would say because i do think we have a lot of capital in the United States now but we have a business tax system that is incenting u. S. Companies keeping that capital abroad. The other thing we want to incent is that money comes back to the United States both now as well as Going Forward. And that money can be deployed to create new business here and create jobs and that we stop things like inversions because it makes economic sense for u. S. Companies to do business here. So the incentives both for the company to use their money more wisely, to invest it within to create jobs but also to Keep Companies from moving abroad . Correct. On behalf of all those folks in Evangeline Parish and elsewhere who want prosperity, i thank you for your offer to serve and i look forward to supporting your nomination. Thank you, senator. Your time is up. Senator warner. Thank you. Its a pleasure to see you, mr. Mnuchin. Appreciated our visit and congratulations on your nomination. Ive got a series of topics so im going to try to move quickly as well. The United States, obviously, enjoys enormous advantages, particularly around the status of us being the reserve currency. That allows us lower Interest Rates and everything from Student Loans to mortgages. Senator bennet already raised this but i want to raise it again. The president elects comments about potentially renegotiating the debt during the campaign were unprecedented. I want you to affirm to this body that on a goog forward basis, it will be your policy, as much as you can influence the president elect, that we would never again question americas willingness to question its i agree with that 100 and let me also just thank you for meet with me and acknowledge as an incredibly successful businessperson, i appreciate your service here. I dont want that to eat into my time. Sorry. There are i have been very troubled by even some folks in Elective Office who have somehow said we can ignore the debt ceiling without consequences. There are even some that are going out and saying, somehow we could prioritize those debt obligations and potentially pay off bond holders. Many foreign. Many chinese. And ignore obligations to pay states, which would then affect their bond ratings, to honor the commitments, the United States government has made to pay salaries of fbi employees, et cetera. It is your policy that the United States in terms of its debt obligations needs to honor all its debt obligations and should not have any ability to prioritize those obligations. Absolutely. And i hope you will woirrk withe so we get that done. Weve already spent the money. We have the obligations. There should be no uncertainty that were paying the bills. Thats extraordinarily important and those who somehow argued for prioritization would wreak havoc in the financial markets. I want to reraise what senator bennet raised. If you get this role, words that you say and the president elect will say will have consequences. Weve already seen this. The actions of the president elect in terms of commenting on the strength of the dollar, unprecedented. No president , democrat or republican, has ever done this before. It has effects. Now you will simply be a Senior Adviser in the cabinet of the president but how do we ensure, since words have such consequences, that there will be an ability for the Trump Administration on Economic Policy to try to speak with a single voice . Well, if i am confirmed, i think that once we all get in office, and have regular access, both myself and the administration, i think you will see that. And again, there may be times where, you know, theres a view that the dollar is slightly too strong, but i do believe well speak with a unified voice. Then expect the president elect, but then president , would continue to break all precedent and be willing to weigh into these matters unlike any other prior president. As you know, this president is willing to do a lot of things that other president s havent done, and i think many of them are great. Lets move to another area. One area that ive had a huge amount of concern and interest in and a number of us on this panel is on the fannie and freddie. And i know there were some people that potentially interpreted some of your comments about recap and release which would in a sense say, even though the american taxpayer was paid back the 188 billion that we invested in those failing institutions at a moment of crisi crisis, i think both of us would say thats high risk capital and should get a better return. But those who simply say lets refloat these two entities and basically ignore some of the underlying challenges. Do you support that position of recap and release that some have advocated. Let me be clear. I did make some comments about this. My comments were never that there should be recap and release. What my comments were, and first of all, ive been around the mortgage industry for 30 years. Ive seen this for a long period of time. So this is an area that i do believe i have expertise in. For very long periods of time, i think that fannie and freddie have been well run without creating risk to the government. As well as theyve played an important role. I know youre running out of time mr. Chairman, can i get an extra 30 seconds . Can i just answer this so you get more tomb. These are very important entities to provide the necessary liquidity for Housing Finance and what ive committed to is that i will work with both the democrats and republicans. What ive said and i believe, we need housing reform. We shouldnt just leave fannie and freddie as is for the next four or eight years under government control without a fix. That i believe we can find a bipartisan fix for these so on the one hand, we dont end up with a giant bailout. On the other hand we dont run the risk of completely limiting Housing Finance. I appreciate those comments and look forward to working with you. Since i took most of the 30 seconds on your statement i have two quick questions hopefully can answer them with yes or no answers. One is, in light of those comments about recap and release, you commit not to